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Home My WebLink AboutRS1- Economic Development Agency 0 DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY REOUEST FOR COMMISSION/COUNCII.ACTION FROM: KENNETH J.HENDERSON SUBJECT: FREEWAY HOME CENTER Executive Director DATE: May 13, 1994 synopsis of Previous Commission/CouncillCommittee Action(s): Since December 1993, the Commission has considered providing financial assistance to Steward and Associates to finance the renovation of the Freeway Home Center. ------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) (Counc0woman Pope-Ludiam's Recommendation) MOTION: That the Community Development Commission consider providing financial assistance to Al Steward and Associates, Inc.,based upon the documentation submitted by Valley Bank of Moreno Valley. Adn'um' 'strator KENNETH J.HENI ERSON Executive Director -----------------------------------------------------------------------------------------------'------------------------------------------- Contact Person(s): Kenneth J Henderson Phone: 5081 Project Area(s): Southeast Industrial Park(SEIP) Ward(s): Three(3) Supporting Data Attached: Staff Report FUNDING REQUIREMENTS: Amount: $1.5 Loan Guarantee Source: Tax Increment $1 million Loan Budget Authority: Requested Commission/Council Notes: -------------------------_-------_----------------------------------------------------- KJH:lag:05-02-07.cdc COMMISSION MEETING AGENDA MEETING DATE: 05/16/1994 Agenda Item Number: -RS - I p O DEVELOPMENT DEPARTMENT STAFF REPORT ----------------------------------------------------------------------------------------------------------------- Freeway Home Center This item has been placed on the agenda at the request of Councilwoman Pope-Ludlam. Attached to the staff report is a Letter of Interest from Valley Bank of Moreno Valley indicating its desire to consider a$1.5 million dollar loan to Allen Steward and Associates, Inc., based upon the terms and conditions set forth in said letter. The Letter of Interest from Valley Bank only covers $1.5 million of the $2.5 million dollars necessary to complete the proposed project. Mr. Steward, through Councilwoman Pope-Ludlam, has asked that the Community Development Commission consider providing a guarantee for the$1.5 million that could potentially be provided by Valley Bank and the Agency loan the remaining amount ($1 million) directly to Allen Steward, Inc., from its own or outside resources. As of this writing, staff is of the understanding that additional correspondence will be forthcoming from Valley Bank to the Agency regarding the bank's willingness to consider loaning the $1 million dollars directly to the Agency. This information will be disseminated to the Commission immediately upon receipt. Councilwoman Pope-Ludlam recommends adoption of the form motion. KENN TH J. HE ERSON,Executive Director Development Dep rtment ------------------------------------------------------------------------------------------------------------------ KJH:Iag:05-02-07.cdc COMMISSION MEETING AGENDA MEETING DATE: 05/16/1994 Agenda Item Number: .[ U a - ---- ------- .. --------------- P54-27-i994 031 i6PM Mr( Valley Ben% MJ,CH 475% TO 8036000 P.01 .. VALLEY BANK uN -- �BYewr.,ra ADMIMSMAMN 1960 April 27, 1094 Mr. Tim 6toinhaus Executive Director tan Bernardino Redevelopment Agency 201 North •E• Street San Bernardino, CA 92501 Re. Freeway Home Center bear Mr. Steinhaus; We had occasion today to review the proposed Freeway Home Center project with Mr. E.R. wood. While we have not had time to review the project in detail, we arc corresponding with you to express our interest in the project. our thinking at this time would be as follewa: Loan Amount : $l, soo, 000.00 Borrower: Allen Stewart , et al Guarantor: San Bernardino Redevelopment Agency- - Interest Rate; prime + 2 .25% to 2.75% - variable Loan Fee: 211 to 3% Loan Terms: Interest only for 16 months rolling into a permanent loan thereafter of 222 monthly payments of $6, 756 .76 plus interest . (20 year total) Interest Reserve: : $210,000 non-interest bearing. (To cover the 18 month interest only period. ) Appraisal: A new appraisal of the property will be needed which chows a value of not lees than $3 , 000, 000 . We have enjoyed a good working relationship with your agency during the past year and are hopeful that we will be able to make this project work as well. While we have not requested deposits In the past, I would ask you to consider placing deposits in our Bank at this time. ,P. S- i � 0 ,�,O'a SUNhW PAD BLVD.. CA 92513 • (")Pd$16-9 • FAX(WG)242-1903 •P.O-BOX 166.MORE 40 VALLEY,CA 925-64161 _______________________—_____--- --- ________ _ 04-27-1494 03tiSPH FROM Valte 96--.G"Hank MJ.Cn 92S 6 TO G� The structure outlined above should allow Hr. Stewart to acquire the property, refurbish it, and proceed through .the lease-up. At that time the cash flow from the project should be more than sufficient to service the debt. The giarantse form which was used in the -Heritage Building' loan (Hntle-Fox) would be acceptable to the Bank on this transaction should it go together. it passed through your well da ours. While this letter is not a commitment to lend, the Bank is desiroua of proceeding with its analysis. When that analysis has been satisfactorily completed and the new appraisal has been reviewed, the Bank would then be in a position to issue such a letter. Tf there are questions about any of the preceding, please feel free to contact me at your convenience. very truly yours, DAL Doug Mills President/M CC-. E.H. wood n � , 4F DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY MEMORANDUM ----------------------------------------------------------------------------------------------------------------- TO: Honorable Chairman and Members of the Community Development Commission FROM: KENNETH J. HENDERSON Executive Director SUBJECT: FREEWAY HOME CENTER- SUPPLEMENTAL AGENDA ITEM NUMBER RS-1 DATE: May 16, 1994 COPIES: Administrator-EDA; Project Manager Wong; File ------------------------------------------------------------------------------------------------------------------ This memorandum is a follow-up to the Freeway Home Center staff report contained in the Community Development Commission's May 16, 1994, Supplemental Agenda. As indicated in that report, staff was attempting to obtain a response from Valley Bank as to whether the Bank was interested in loaning direct to the Agency the amount not covered($1 million)by the potential direct bank loan to Steward and Associates. The attached letter is self-explanatory. The Bank is not in a position to loan to the Agency the additional $1 million necessary to complete the proposed project. Staff, in the meantime, has consulted with Chino Valley Bank(CVB). Chino appears to be willing to make the loan to the Agency along the following terns and conditions: TERM: Five(5)Years COLLATERAL: Unsecured INTEREST RATE: Prime(6.75%) plus one(1%) (Rate could be lower if Agency provided additional deposits) The Commission may wish to consider this information in light of the form motion proposed by Councilwoman Pope-Ludlam. wlwpw�1 KENATH J. NDERSON, Executive Director Development Department ------------------------------------------------------------------------------------------------------------------ KJH:lag:94-05-02.mm 1 Attachment S��&h 7 05-13-1994 11:29RM FROM Valley Bank MV,CR 92556 To 3845434 P.01 VALLEY BANK ,�SIMCM SINCE �VAl1EY9exK ADMINI57RAFON 1960 \+ May 13, 1994 �N Kenneth J. Henderson Executive Director Development Department S.B. Economic Development Agency 201 North E Street San Bernardino, CA 92401-1507 Dear Mr. Henderson: This letter is to follow-up conversations relative to Valley Bank's ability to accept the guarantees of the Redevelopment Agency (RDA) of loans granted by Valley Bank, i.e. , the Heritage Building, Freeway Home Center, AM/PM Mlnimart_ we operate under regulations which limit our ability to loan to, or have credit relationships with, any one entity. in the transactions referenced above, the Redevelopment Agency is a third party guarantor - an accommodation party. Under 12 CFR 32.101, the guarantees accepted by Valley Bank from the RDA do not accrue toward our lending limit guidelines and therefore the Bank can accept the guarantees without any violation. Should the Bank make a loan directly to the RDA, the rules change and we not only violate our limit, but we sacrifice our ability to enter into any further loan accommodations with the agency. The lending limits are governed by a bank's capital structure. While our capital structure is very strong for our bank size, we don't have the "capital horsepower" to be both a lender, and an acceptor of RDA guarantees. We wish it were otherwise. The Bank is pleased to be a participant in the redevelopment activities of the City of San Bernardino and would anticipate a long-term working relationship in those endeavors. Should you have any questions regarding any of the above, please feel free to contact me at your convenience. very truly yours, (30-��As Doug Mills President/CEO CC- Gene Wood 24010 SUNNYMEAD BLVD., CA 92553 • (909)242-1959 • FAX(909)242-19W •P.O.BOX 108,MORENO VALLEY,CA 92556-0186 TOTRL P.01 j DEN —LOPMENT DEPARTME.iT OF THE CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY MEMORANDUM --------------------------------------------------------------------------------------------------------- TO: Honorable Chairman and Members of the Community Development Commission ter, a c: FROM: KENNETH J. HENDERSON a m Executive Director SUBJECT: FREEWAY HOME CENTER- SUPPLEMENTAL AGENDA ITEM o NUMBER RS-1 fJ ri rn a DATE: May 16, 1994 COPIES: Administrator-EDA;Project Manager Wong;File ----------------------------------------------------------------------------------------------------------------- This memorandum is a follow-up to the Freeway Home Center staff report contained in the Community Development Commission's May 16, 1994, Supplemental Agenda. As indicated in that report, staff was attempting to obtain a response from Valley Bank as to whether the Bank was interested in loaning direct to the Agency the amount not covered ($1 million)by the potential direct bank loan to Steward and Associates. The attached letter is self-explanatory. The Bank is not in a position to loan to the Agency the additional $1 million necessary to complete the proposed project. Staff, in the meantime, has consulted with Chino Valley Bank(CVB). Chino appears to be willing to make the loan to the Agency along the following terms and conditions: TERM: Five(5)Years COLLATERAL: Unsecured INTEREST RATE: Prime(6.75%) plus one(1%) (Rate could be lower if Agency provided additional deposits) The Commission may wish to consider this information in light of the form motion proposed by Councilwoman Pope-Ludlam. wWiw�q KENATH J. NDERSON, Executive Director Development Department ------------------------------------------------------------------------------------------------------------------ KJH:lag:94-05-02.mm l Attachment 05-13-1994 11:29AM FROM Valley Bank MV,CA 92556 TO 3845434 P.01 VALLEY BANK °�9 YsEa �as�SINCE my�V��tr B.u:K ADM/N/S/RA710N JN May 13, 1994 Xsnneth J. Henderson Executive Director Development Department S.B. Economic Develcpnent Agency 201 North E Street San Bernardino, CA 92401-1507 Dear Mr. Henderson: This letter is to follow-up conversations relative to Valley Bank' s ability to accept the guarantees of the Redevelopment Agency (RDA) of loans granted by Valley Bank, i.e. , the Heritage Building, Freeway Hone Center, AM/PM Minim3rt- we operate under regulations which limit our ability to loan to, or have credit relationships with, any one entity. in the transactions referenced above, the Redevelopment Agency is a third party guarantor - an accoucdation party. Under 12 CFR 32.101, the guarantees accepted by Valley Bank from the RDA do not accrue toward our lending limit guidelines and therefore the Bank can accept the guarantees without any violation. Should the Bank snake a loan directly to the RDA, the rules change and we not only violate our limit, but we sacrifice our ability to enter into any further loan acconrrodations with the agency. The lending limits are governed by a bank's capital structure. While our capital structure is very strong for our bank size, we don't have the "capital horsepower" to be both a lender, and an acceptor of RDA guarantees. We wish it were otherwise. The Bank is pleased to be a participant in the redevelopment activities of the City of San Bernardino and would anticipate a long-term working relationship in those endeavors. Should you have any questions regarding any of the above, please feel free to contact me at your convenience. very truly yours, aavjl�s President/CEO CC: Gene Wood 24010 SUNNYMEAD BLVD., CA 92553 • (90,9)242-1.95.9 • FAX(909)242.1903 •P.O.BOX 188,MORENO VALLEY,CA 92556-0105 TOTAL P.01